The significance of critical minerals for clean energy transition as well as the economic growth has been rising, considering their usage in the EVs.

There has been an increasing global shift towards electric vehicles (EVs) since the Paris agreement commitments and the recent Glasgow conference. Securing critical minerals required for the development of electric vehicle batteries is a pressing concern as demand for these products is predicted to soar. The significance of critical minerals for clean energy transition as well as the economic growth has been rising, considering their usage in the EVs. Afterall, the growth of China as the world’s leading manufacturer of EVs owes to its advanced capacity of critical minerals.

The recently critical mineral-centric trade agreements of the US with allied powers reflects the growing significance of these minerals in the US. In the United States, the percentage of sales of electric cars has risen from 0.2% in 2011 to 4.6% in 2021. Some optimistic projections have electric vehicle sales exceeding 50 percent of total passenger car sales in the United States by 2030, whereas S&P Global Mobility predicts sales could reach 40 percent of total passenger car sales by 2030. In order to make these projections a reality, the US needs to secure its critical minerals sources through supply chain resilience agreements. The United States has declared a number of long-term plans to expand its critical mineral mining operations at home. These plans include the Strategy to Secure and Reliable Supplies of Critical Minerals (2017), the Onshoring Rare Earth (ORE) Act (2020), and the US Compete Act (2022).

Table 1- Policy/Events furthering EV adoptions in the US (1889-2022)

Year	Policy/Event	Goal/Measure/Cause
1889	First EV in the US	To spark interest in EVs
1901	Edison innovated EV battery	To advance the EVs manufacturing
1901	World’s First hybrid EV- ‘Lohner-Porsche-Mixte’	To generate battery and gas engine as two power sources in the EVs
1920-35	Decline in EV usage with therise of gas-powered vehicles	Due to discovery of cheap Texas crude oil
1968-73	Re-created interest in EV	Oil crisis and soar prices of gasoline
1971	Over the Moon EV	First manned vehicle
1979	Faded interest in EVs again, and preferred gas-powered cars	Due to its limited performance and range
1990-92	Renewed interest in EVs with new state and federal regulations	Automakers begin modifying vehicle into EVs enhancing their speed and performance
1997	First mass-produced hybrid EVs-Prius by Toyota	Increasingly used by celebrities, but less preferred by low-income class
2006	Silicon Valley startups for electric cars	Aimed to produce luxury electric sports car
2009-13	Campaign to develop nation-wide charging infrastructure	To set up more than 18,000 commercial, residential, and public chargers
2010	First zero tailpipe emission car- LEAF- launched by Nissan	Aimed to meet climate commitment as funded by US Energy Department
2013	EVs became affordable for consumers	Battery cost reduced as a result of state regulations and policies
2014	Multiple EV options- hybrids, plug-in hybrids, and all-electric	To give choices to consumers as per their budget
2015	Paris Agreement commitment of US
2021	Infrastructure Investment and Jobs Act	Modernise the national power grid to accommodate increased electricity consumption and develop local battery manufacture and recycling capacity
2022	Inflation Reduction Act (IRA)	Extended a tax credit of up to $7,500 for the purchase of new electric vehicles until 2032

Source: Department of Energy.gov, “Timeline: The History of the Electric Car”,  https://www.energy.gov/timeline-history-electric-car. Accessed on 19 May, 2023.

Key Partnership and Agreements Announced

In June 2022, the US launched the first multilateral arrangement to ensure critical mineral security and resilience, termed as “Minerals Security Partnership” to ensure that critical minerals are produced, processed, and recycled. This includes eleven countries as members, such as, Japan, Canada, Australia, Finland, France, Germany, the Republic of Korea, Sweden, the United Kingdom, and the European Commission. Through MSP, Participating countries will ensure environmentally and socially responsible mining, processing, and recycling, which will support their ability to realise the full economic development benefit of their geological endowments. The MSP targets critical minerals most particularly for electric vehicles and advanced batteries. In the same month, the US also announced the “Partnership for Global Infrastructure and Investment (PGII)” with G7 countries, with the goal to build renewable energy supply chains. The objective of PGII is to raise $600 billion by 2027 through the mobilisation of additional capital from like-minded partners, multilateral development banks, development finance institutions, sovereign wealth funds, and others for global infrastructure investments.

In addition to these multilateral initiatives, the United States has launched significant bilateral agreements and partnerships over the past five years in order to secure EV minerals. Some of them are as follows:

With Australia

Amidst the global effort to diversify supply chains away from dominant producer China, Australia provides approximately fifty percent of the world’s lithium as well as other minerals, such as rare earths, used in batteries for electric vehicles and defence.

The ‘Australia-United States Climate, Critical Minerals and Clean Energy Transformation Compact’ was unveiled last week as an agreement to coordinate policies and investments supporting the expansion of the critical mineral industry. In the backdrop of the Inflation Reduction Act (IRA), which is pumping upwards of $800 billion into clean energy ventures and luring a major flood of foreign finance to the US, this Compact will be a critically-important development. New investment and export opportunities for Australia’s critical minerals, clean technology, energy transition materials, and renewables supply chain are proposed by the Compact, which would make Australia a domestic US supplier under the IRA. This will enhance the ability of both countries to reindustrialize as world leaders in global decarbonization goals, and zero-emissions trade and investment.

With European Union

On March 16, 2023, the European Commission announced a proposal for a new Critical Raw Minerals Act, which is subject to be passed by the European Parliament. It aims to give the EU more control over its access to critical raw materials for the digital and green revolutions. Even though trade tensions exist between the United States and the European Union, Vice President Joe Biden and European Commission President Ursula von der Leyen agreed to begin negotiations regarding critical minerals used in EVs. Europe is upset with Biden’s Inflation Reduction Act, a $430 billion programme that provides large subsidies for products manufactured in the United States and aims to address the climate crisis and promote renewable energy. The bill constituted a big domestic political success for Biden upon its enactment, and the administration has been trying to satisfy European concerns while remaining true to its essential precepts. In reaction to the IRA law in the United States, the European Commission unveiled its Green Deal Industrial Plan, which includes greater amounts of state aid to help Europe compete as a manufacturing base for clean tech products. Biden stated that the foundation of both measures were the ideas of increasing investments and protecting supply networks.

With Japan

The recently signed “Agreement Between the Government of the United States of America and the Government of Japan on Strengthening Critical Minerals Supply Chain” for batteries, most particularly those used to power electric vehicles. It is assumed that Japanese automakers will be able to take advantage of US tax incentives for electric vehicles sold in the US that are manufactured using essential minerals obtained from Japan, even if this is not stated in the Agreement itself. To further the goal of “facilitating trade in critical minerals,” the Parties agree not to impose any export duties and to refrain from enacting any bilateral export restrictions on lithium, nickel, cobalt, graphite, and manganese, the minerals most essential for batteries in electric vehicles. The agreement also seeks to reduce US and Japanese reliance on China for these materials by requiring cooperation against “non-market policies and practices” of other nations in the sector. The Biden administration is hoping that through mineral-centric trade agreements, reliable partners will be able to take advantage of the $7,500 EV tax credits included in USA’s climate-focused Inflation Reduction Act. The treaty contains pledges on environmental standards and worker rights, and officials from the Biden administration claimed that this is necessary to accomplish climate targets because of the large quantity of minerals required to electrify the global auto market.

However, the European Union, Japan, and South Korea are concerned that the United States’ incentives may divert EV and battery investments away from their coasts because half of the credit for purchasing consumers is designated for North American-assembled vehicles and batteries.  In order to qualify for the remaining 50% of the credit to be applied, at least 40% of the value of the critical minerals in the battery of a country’s EV must require to be harvested or processed in the United States or a country with a free trade agreement with the United States, or recycled in North America, or should be in compliance with the necessary standards to receive the applicable US. tax credits. For instance- Yasutoshi Nishimura, Japan’s commerce minister, recently told reporters in Tokyo that electric vehicles constructed using battery minerals mined or processed in Japan should be in compliance with the necessary standards to receive the applicable U.S. tax credits.

EV minerals: Emerging base for US-India Partnership?

As climate and clean energy leaders, the United States and India share a vision of deploying renewable energy to reduce greenhouse gas emissions and meet climate change mitigation objectives. The recent US-India Strategic Clean Energy Partnership Ministerial Joint Statement in October 2022 mentioned the progress on developing fuels and technologies, as well as electrification and decarbonization of end use sectors. The Ministers were briefed on the U.S.-India Partnership to Advance Clean Energy-Research (PACE-R) and its initiatives including, joint research and development on smart grids and energy storage as well as new collaboration on carbon capture, utilisation, and storage (CCUS) technologies. They have also agreed to put up an EVs financial services facility in India and develop an enabling ecosystem to promote the electrification and decarbonization of the transportation industry.

In terms of EV minerals, both India and the United States have been taking steps to ensure a reliable supply of strategic critical minerals and elements over the past decade. Most recently, both the US and India have established acts and legislation with the goal to improve the domestic manufacturing capability, which requires protected access to critical materials, for instance- US Compete Act and the Indian Semiconductor Mission. In addition, all of their conversations, whether they be bilateral or multilateral, centre around the topic of critical minerals and emerging technologies, for instance- the Quad critical minerals partnership act. Agreements like the Partnership to Clean Energy Research (PACE) in 2009, the Strategic Energy Partnership (SEP) in 2018, the Partnership for a Green Future in 2018, and the US-India Climate and Clean Energy Agenda 2030 Partnership in 2021 have already begun to shape bilateral critical energy and green economy partnerships between India and the United States.

However, despite having such close connections, India is not included in the US-led 11 members “Minerals Security Partnership” (MSP) that puts a question on the confidence of the US in India’s critical mineral potential. It should be noted that India is a reservoir of 49 main critical and non-fuel minerals as reported by the Council on Energy, Environment, and Water (CEEW) and the Ministry of Science & Technology, which proves it a viable resource for the manufacturing industry and supply chain resilience goals, thus make India’s involvement in the MSP a priority.

https://www.financialexpress.com/business/defence-growing-us-strategiespartnerships-to-secure-ev-minerals-3147646/